rush rfid-enabled kanban case study 012209

1 Rush Tracking Systems - Client Case Study: RFID-Enabled Kanban

The client is a leading manufacturer of heavy indus-trial equipment as well as one of the largest equip-ment financing companies in the world.

One of their assembly operations utilizes small plas-tic totes to hold painted metal parts which will be consumed line-side in the assembly operation. When the parts are consumed and the totes emp-tied, an operator removes the empty tote and re-places it with a fresh tote full of painted metal parts. The operator initiates the replenishment process by barcode scanning the empty tote. This process in-cludes taking the empty totes to a third party ware-house, filling it with raw unpainted parts, transport-ing it to another warehouse and where a third-party paint contractor paints the parts. The finished parts

Opportunity Overview:

Client Case Study:

RFID-Enabled Kanban

• Client: Global automobile manufacturer

• Business Challenge: Improve reliability and reduce cost of Kanban replenishment system

• At Stake: Financial loss due to poor visibility to inbound finished goods parts replenish-ment for assembly process

in the tote are then returned back to the assembly op-eration for line-side replenishment.

Since the barcode process was manual and labor in-tensive, errors were a fact of life. The inevitable mis-scans or no scans caused disruptions to the replenish-ment process. The lack of visibility to the status and location of the parts resulted in significant labor to lo-cate, verify and expedite parts to insure the assembly operation would not be shutdown. When the client sought to automate and error-proof the data collection required to support the process, they turned to RFID expert Rush Tracking Systems who helped design and build a RFID-enabled tote tracking solution to support the Kanban replenishment loops for the work in progress (WIP) parts.

Business Challenge:

Minimize WIP “hot calls” to improve manufacturing efficiency

The client had a 15 month backlog and was focused on maximizing throughput, quality and production efficiency. Missed or duplicate barcode scans re-sulted in discrepancies in inventory status main-tained by the SAP Materials Management system.

The errors from the barcode system had a large impact on the cost to produce. Since production managers sought to avoid line stoppages at virtu-ally any cost, expediters would spend significant time looking for parts and managing the “hot parts” calls.


“As-Is” Barcode Process:

As materials are used on the production line, the empty Kanban containers are manually scanned to initiate the replenishment process. The barcodes ap-plied to the containers represent Kanban ID numbers and correlate to specific parts and processes within the SAP Materials Management system.

The client tracks the parts replenishment progress via a SAP Kanban board. The entire part replenish-

ment process is activated by the first scan of an empty tote. The diagram on the opposite page il-lustrates the change of status of the parts as the container travels through out the replenishment process.

The available colors indicate status; Full/Green, Empty/Red, Allocated/Tan, In-Paint/Yellow. Without visibility to the parts status, SAP cannot properly identify depleted materials and initiate the inventory review, allocation and order process.

From the point of picking, parts are custom painted at an attached facility prior to being shipped to the assembly site. A dedicated pool of totes is utilized to support the movement of the WIP parts. Multiple containers, each with a unique Kanban ID, are dedicated to specific parts and workstation users.

Inconsistencies in inventory numbers and resulting WIP parts shortages produced the following impacts on production:

• Expediters spent significant time resolving in-consistencies of the barcode-enabled Kanban board.

• Expediters wasted significant time searching for parts within the 1.5 million square foot facil-ity when inconsistencies could not be readily resolved.

• Some line-side parts shortages would trigger a

“run-without” condition where a product would be sent to the next station without the parts needed. When the missing parts were eventually located, they would be placed on the product in a rework operation. This was less expensive that shutting down the line but still inefficient and expensive.

• Planners and Operators lost trust in the in-ventory management system and therefore held safety-stock buffers which reduce in-ventory turn KPI’s and tied up capital.

Business Challenge (continued):


3rd Party StoragePainting Facility

Manufacturing Plant

Outbound Tunnel

Inbound Tunnel

OutboundDock door

OutboundDock door

[painted component in tote]

[empty tote]

1. Unpainted component in tote

2. Painted component in tote

3. Empty tote returned


Manufacturing Plant

Outbound Tunnel

Inbound Tunnel

OutboundDock door

OutboundDock door


[empty tote]




KANBAN STATUS INVENTORY STATUS RED = EMPTY Empty tote staged for shipping at the Manufacturing/Assembly plant TAN=FOUND SAP changes status upon inventory allocation

YELLOW = IN PAINT Scan completed as parts are sent to painting facility and received back

GREEN = FULL Final scan as painted parts are shipped to assembly plant


monitoring of devices and design of workflow rules and alerts.

Rush Tracking conducted site visits to assess the placement of the RFID-enabled portals. Rush Track-ing also ran system tests off-site at their RFID lab in Kansas City to simulate the pilot infrastructure (readers, light stacks and motion sensors) and to fi-nalize the reader configuration settings and tag placement on the totes for the best read rates.

The pilot involved one-time tagging of hundreds of totes used to carry up to 75 different parts, with the help of pre-encoded reusable tags. Alien Technology

Solution: RFID-enabled Process:

party storage provider. The RFID reads are collected via RFID enabled portals or via the Rush Tracking RFID enabled lift truck solution called ‘VisiblEdge”. This first RFID read event as the totes leave the pro-duction space initiates an automated Transfer Order/Pick request and automatically begins the replenish-ment process.

Rush Tracking worked closely with the client to final-ize business requirements and define the functional specifications for the solution. OATSystems’ OAT Asset software was selected based on its ability to provide a single dashboard for all steps involved in this RFID implementation. These included setup of the reader network hierarchy, configuration and

The client commissioned Rush Tracking to perform a RFID Feasibility Assessment to investigate the use of RFID enabled tracking of the individual totes which hold and transport the WIP parts.

Totes dedicated to carrying specific parts were tagged with RFID labels at the start of the pilot study to provide real time visibility to their movement through the entire Kanban process loop. The RFID system tracks the totes as they are sent to the ware-

house to be loaded with unpainted parts from stor-age. It tracks the totes filled with unpainted parts into an attached facility run by a third party paint contrac-tor, and finally tracks the totes filled with painted parts as they are returned line-side at the assembly plant.

As the parts are consumed on the production line, the empty Kanban container RFID Tags are read as the totes are physically shipped back to the third-


Manufacturing Plant

Outbound Tunnel

Inbound Tunnel

OutboundDock door

Reader

OutboundDock door


[empty tote]





Manufacturing Plant

Outbound Tunnel

Inbound Tunnel

OutboundDock door

Reader

OutboundDock door


[empty tote]





• Real-time accurate visibility to finished goods parts inventory, movement and status

• Significant labor savings compared with the manual container-tracking process due to improved inventory

visibility (less time spent searching for parts). • Improved inventory accuracy. By linking material and its container and tracking container movement inven-

tory accuracy within the SAP materials management application has improved • Minimized risk of production down-

time due to missing containers with improved replenishment

• Reduced number of exceptions

reported as only “actual” variance to plan are reported

• Reduced number of emergency

orders and “hot calls” • Reduced labor costs with auto-

mated process control • Reduced “run with-outs” • Access to detailed stock overviews

for each container type. • Reduced working capital via im-

proved inventory turns

RFID Solution Benefits:

RFID readers designed for rigorous industrial envi-ronments were installed at key points in the flow.

A single instance of OATAsset was deployed to man-age the RFID readers placed within the assembly facility and the third-party storage facilities. Status messages are generated when containers pass by an RFID reader, indicating the EPC number, Kanban ID of the container, location status, and read time-stamp. OAT software pushes the inventory status up to the client’s inventory management system. SAP uses this data to provide visibility to plan vs. actual variations that extend to in-transit material, work in process, and scheduled receipts.

The OAT solution offers a suite of pre-configured re-ports that include visual track and trace, historical

analysis, real-time visibility to assets and their con-tents, and status and exception reports to highlight process anomalies. OAT Asset Tracking solution supports standard interfaces with back-end legacy systems, and a Web service feature was used to interface with SAP through SAP XI. The customer was not required to purchase any new software and /or plug-ins from SAP to enable this integra-tion.

The entire deployment process, including require-ments gathering, solution design, testing and im-plementation was completed in eight weeks. Rush Tracking was successful in replacing the manual barcode-based process of tracking finished goods parts inventory with an automated, error proof RFID-enabled tote tracking solution. Production managers can now easily identify the location of each container at any point in time. Most impor-tantly, exceptions based on accurate real time data are exposed to planners so disruptions can be re-solved immediately with greatly reduced oversight.


Barcode data collection technologies are widely used and in general cost effective and accurate. One of the challenges with barcode, however, is the requirement for human intervention undoubt-edly introduces errors. In this Kanban replenish-ment case study, the human involvement re-quired to scan barcodes resulted in less than 100% reliable business processes and created gaps and errors in the data collection causing costly downstream consequences.

The RFID solution which replaced the barcode system has proven to be extremely reliable and

Conclusion:

Rush Tracking Systems provides world-class RFID systems integration and business process consulting services for organizations look-

ing to maximize the business value and performance of investments in RFID tracking technologies. Rush Tracking offers unsurpassed

RFID technical expertise and market-proven products from the industry’s leading manufacturers.

For more information, visit www.rushtrackingsystems.com, call (913) 227-0922 or email [email protected]

RFID Solution Results:

The solution has been operating in a production en-vironment for over 15 months and has been aston-ishingly reliable. The solution compares extremely favorably to the previous barcode system where operators documented an average of 52 scanning errors per month. The RFID solution has reduced errors an infrequent handful. Additionally as errors are tracked down they are usually attributed to proc-

ess anomalies rather than technology failures.

Plant supervisors were so pleased with the reliability and value of the solution that they asked that the pilot system not be removed at the end of the pilot period, that was 15 months ago. The client is cur-rently deploying a full production version of the tote tracking solution plant wide.

cost effective and proved to reduce documented errors from 52 per month to an occasional error or two. The real time and reliable material movement and inventory posi-tion data provided by the RFID solution provided tremen-dous business value and as a result is being deployed plant wide.

Manufacturers who are vertically integrated, manage complex assembly operations and use reusable pallets, containers, totes, racks or jigs may have great opportuni-ties take advantage of RFID to improve process reliability and operational performance.